In West Dallas, Finding MMDs
On Wednesday, as you're no doubt aware by now, the Dallas City Council voted to create three municipal management districts, or MMDs. They're the first in Dallas, though Houston is often invoked as proof that MMDs do wonders for development. Which is no surprise, as they're made for development -- or, more specifically, developers, who would be allowed to create self-governed districts in which they could issue public debt and then levy taxes, assessments and other fees to pay down that debt.
In the case of our three soon-to-be MMDs -- which are actually designated by state legislature; hence, the scrambling race to get them approved by the council -- each has a single developer-sponsor. Trinity River West, shown above, has West Dallas Investments, which includes Phil Romano. North Oak Cliff has INCAP Fund
Essentially, the point of an MMD is so that developers can "levy taxes on themselves to accelerate economic development." That's how Office of Economic Development director Karl Zavitkovsky put it yesterday during a meeting with the West Dallas Chamber of Commerce at the Lakewest YMCA.
"We're all on a steep learning curve," Zavitkovsky said, ad-libbing it after his PowerPoint lost power. "[MMDs] are nothing mythical. They're just complicated." He launched into an explanation of how the districts work, from inception to governance (a nine-person board, including three city officials, two residents and four "at-large" voting members). The biggest concern, said Zavitkovsky, seems to be the potential conflict between how the city council and the state legislature view MMDs.
"When [bills] go to Austin, things change," he said. "It's a sausage machine." He shook his head, smiling, and Victor Toledo, West Dallas Chamber of Commerce chairman and a veep at KB Home, jumped in, tag-teaming with Zavitkovsky to extol the benefits of MMDs. Toledo suggested that the proceeds from the MMDs' taxes and assessments could be used to set up the much-vaunted trolley line from West Dallas to downtown.
"And you could treat that as an environmental expense!" Zavitkovsky crowed. "You're reducing [automobile] traffic!"
"You could leverage TIF dollars too!" Toledo added.
There were, of course, some inevitable concerns.
"What happens if you're not green?" asked Habitat for Humanity's Kristen Schulz, referring to the city maps that outline MMD areas in bright green, as you can see in the illustration above. "What if you're gray?" The gray areas are residential, so they're not included in the MMDs. But a worry among low-income residents and their advocates is that even if they're not taxed directly by the MMDs, development and improvements will lead to higher property values and accompanying tax hikes.
"That's the inevitability of the development process," Zavitkovsky said. It's a chicken-versus-egg question, he added: "You have to create value to be able to levy an ad valorem tax," but the taxation is part of the engine for development. What's more, since MMDs are purely commercial entities, they don't include any requirements for affordable housing.
What they do require are sponsors-developers with money, land and a well-articulated "vision." But there's no requirement for those developers to specify exactly what they're going to do with the land, which raises the possibility of speculation-based assessments.
"There's always going to be some risk [of speculation]," said Chamber president and former mayoral candidate Cappello, "but the value in that area has risen tremendously because of the new bridges and successful endeavors such as the Belmont Hotel. If there were any speculation at all, it would be conservative."
Conservative though it may be, what happens to the MMDs, and their surrounding populations, is more or less up to the developers. "West Dallas needs something like this," Cappello said -- and he's pretty sure West Dallas and North Oak Cliff will get it. Which is why, as the Chamber meeting wound down, a feeling of inevitability pervaded the room: MMDs will happen, and a developer's city cements its reputation.